Even U.S. consumer prices, when subsidized by foreign governments like the Chinese Communist Party, represent a form of debt that must be repaid — one way or the other.

Breathe.

“Passing On”

www.thesmartset.com/article/article09171401.aspx

  • 100 years ago, the last passenger pigeon died.  Her name was Martha.
  • Placed between Gorilla World, Cat House, and World of the Insect at the Cincinnati Zoo is an aviary pagoda.  That’s where Martha spent her final days.  There are three stuffed passenger pigeons on display in the pagoda, alongside Incas, the last captive Carolina Parakeet.  Incas died at the museum in 1918, inside Martha’s cage.  On the path to the pagoda, a bronze memorial statue of Martha stands frozen on a rock.  Her head is cocked and she’s walking toward something.  Or, she could be walking away.

“Xinhua Insight: GSK China hit with record fine, apologizes”

[Xinhua link -- September 19, 2014]

  • In Friday’s closed-door trial, Changsha Intermediate People’s Court in central China’s Hunan Province ruled the firm guilty of “bribing non-government personnel” and imposed the fine, the biggest ever by a Chinese court.  Five individuals with the firm were sentenced to between two and four years in prison with reprieves.
  • The company will continue to invest in China and support research.  It will continue to develop new medicines in China and increase access to its products in rural areas “through greater expansion of production and through price flexibility.”

“Alibaba’s IPO to end US dominance in technology sector: expert”

[Xinhua link -- September 19, 2014]

  • “Alibaba’s growth rate of more than 30 percent shows that the gap between the Chinese companies, Alibaba and Tencent, and U.S. companies is getting ever closer,” said Qing Wang.
  • [Please note that Alibaba is already bigger than Amazon and eBay put together.]

“Major Foreign Holders of Treasury Securities — July 2014″

www.treasury.gov/ticdata/Publish/mfh.txt

  1. $1.26 trillion: China, Mainland
  2. $1.22 trillion: Japan
  3. $0.35 trillion: Belgium

Our trade deficit is also a type of loan.

Our country is broke, so we have to borrow money to pay for our wars.  Even U.S. consumer prices, when subsidized by foreign governments like the Chinese Communist Party, represent a form of debt that must be repaid — one way or the other.

Why would countries like China and Japan lend us money for seemingly endless war?

(Breathe.)
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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1154] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

Like you, I worry about people who ridicule what they’re too frightened to understand.

Like you, I worry about people who ridicule what they’re too frightened to understand.

The world is changing more quickly than its weather —

“Climate Science Is Not Settled”

http://online.wsj.com/articles/climate-science-is-not-settled-1411143565

  • The crucial scientific question for policy isn’t whether the climate is changing.  That is a settled matter.  The climate has always changed and always will.
  • Policy makers and the public may wish for the comfort of certainty in their climate science.  But. . . .

— but everyone notices the weather.

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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1155] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

Wouldn’t You Be Happy To “Lend” the U.S. All The Money It Needs To Destroy Itself?

Correcting yesterday’s:

“China Tells Domestic Companies — Go Make Overseas Acquisitions”

[Agence France-Presse via Industry Week -- September 16, 2014]

  • The 112.1% year-on-year increase in ODI announced by the commerce industry ministry was a dramatic contrast to the 14% fall in FDI, which sank to $7.20 billion.  Both sets of figures exclude investment in financial sectors.

Adding a second secondary bullet point:

“U.S. International Transactions: Second Quarter 2014″

www.bea.gov/newsreleases/international/transactions/2014/pdf/trans214.pdf

  • The [$3.6-billion] decrease in the current-account deficit was largely due to a decrease in the deficit on secondary income.  In addition, the surpluses on services and primary income increased.  These changes were partly offset by an increase in the deficit on goods.
  • Secondary income receipts increased to $39.9 billion from $31.7 billion, reflecting an increase in fines and penalties paid to the U.S. government (a component of U.S. government transfers).  Secondary income payments decreased to $61.3 billion from $61.7 billion, reflecting a decrease in U.S. government grants.

(I thought you might be curious.)

And now, as antidote to annoying latecomers, from 2005:

“Braveheart, Edward I, and Bush”

www.consortiumnews.com/2014/09/18/braveheart-edward-i-and-bush-2

  • For many people in the world, grievances of past centuries can be as real as the events of last week and often more powerful.  Animosities born of brutality and perceived injustice can distort relations even between countries with strong economic and cultural ties.
  • Leaders with deep historical perspective really do treat war as a last resort, rather than a casual means for achieving some geopolitical end.

Yesterday a favorite young reader asked me to:

  • “Keep reminding people that our country has fertile soil, fresh water, clean air, and room to grow — all protected by two oceans — and this is what the Chinese want from us.”

Done.

Some more good advice:

If you were the People’s Republic of China, wouldn’t you be happy to “lend” the American citizenry all the money it needs to destroy itself?

— this in the form of a question.
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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1153] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

We can all afford a moment to think about our thinking — and who might have “encouraged” it.

Mass communication encourages mass conformity.  We’re dealing with the Internet still reeling from the printing press.

We can all afford a moment to think about our thinking — and who might have “encouraged” it.

Reader beware.  Though instructive, most of what follows is deceptive and in no particular order.

“Why Chinese money is flooding American markets”

www.nbr.com/2014/09/17/why-chinese-money-is-flooding-american-markets

  • Their motivation is straightforward.  They feel their assets are much better protected in the United States.

“China’s Central Bank Injects $81 Billion Into Top Banks to Counter Slowdown”

http://online.wsj.com/articles/china-pboc-injects-81-billion-into-top-banks-1410914151

  • Economists warn more stimulus may be needed.

“China Tells Domestic Companies — Go Make Overseas Acquisitions”

[Agence France-Presse via Industry Week -- September 16, 2014]

  • The 112.1% year-on-year increase in ODI announced by the commerce ministry was a dramatic contrast to the 14% fall in FDI, which sank to $7.20 billion.  Both sets of figures exclude investment in financial sectors.

“China’s outward investment surges as growth pattern shows significant shift”

[SCMP link -- September 16, 2014]

  • China is hoping to diversify its US$4 trillion worth of foreign exchange reserves by investing abroad.

“Undercover investigation: Become a native English teacher in China, no questions asked”

[SCMP link -- September 17, 2014]

  • Andrea Linhartova, an English teacher from the Czech Republic, said she was asked to invent an American persona to give her students a “real” experience.  “I became Andrea, the country girl from Minnesota,” she said.

“When in the US, it’s best to do as the Americans do”

[China Daily link -- September 17, 2014]

  • The government has been working hard to educate Chinese companies on the importance of being localized.

“‘Understanding China’ is an employable skill for American students”

[People's Daily link -- September 17, 2014]

  • The goal is to have more Americans study further in China, and come back to the US with a deeper understanding and broader experience.

“China needs local eye when going global”

[Global Times link -- September 17, 2014]

  • “Strategic” is not a derogatory term, and China, as a major power, has every reason to employ an overseas strategy.  Most of its overseas projects are undertaken by large-sized State-owned enterprises and funded by the State.  However, the overuse of “strategy” and the excessive interpretations by some media have brought misunderstandings about China’s “going global.”

“Who’s Paying the Pro-War Pundits?”

www.thenation.com/article/181601/whos-paying-pro-war-pundits

  • Shouldn’t the public know about their links to Pentagon contractors?

“Christians in east China scramble to save symbol of their faith”

www.cnn.com/2014/09/15/world/asia/china-christians-church/index.html

  • The local authorities are mostly targeting state-sanctioned churches, long tolerated by the ruling Communist Party and often touted as a sign of religious freedom in the officially atheist country.

“Income and Poverty in the United States: 2013″

www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf

  • This was the first decrease in the poverty rate since 2006.  In 2013, there were 45.3 million people in poverty.

“U.S. International Transactions: Second Quarter 2014″

www.bea.gov/newsreleases/international/transactions/2014/pdf/trans214.pdf

  • The decrease in the current-account deficit was largely due to a decrease in the deficit on secondary income.  In addition, the surpluses on services and primary income increased.  These changes were partly offset by an increase in the deficit on goods.

“Three Big Winners From A Scottish Independence Vote”

www.forbes.com/sites/eamonnfingleton/2014/09/17/three-big-winners-from-a-scottish-independence-vote

  • All this notwithstanding, the London establishment has been shameless in spreading false fears.

Shameless.
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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1152] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

Our enemies keep lending us money — regardless of our inability to pay.

Our trade reports are important.  These are what tell the world whether we’re good for the money or we’re not.

Nobody cares about a country’s debt.  It’s the ability to pay that matters.

We’ve racked up $12 trillion dollars in goods deficits since we posted our last surplus in 1975.

We’ve racked up $11 trillion dollars in goods deficits since we put Bill Clinton in the White House in 1993.

Now we need war, continuous war, say our leaders.

Our enemies keep lending us money — regardless of our inability to pay.

www.facebook.com/BobHall2016

E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1151] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

@richardbranson @virginmobileusa – You really ought to fire the CEO of Virgin Mobile USA

Received this email just now.

Folks, contrary to what you may think, I do NOT have to call you, period.

The sooner you realize that, the happier you will be.

Now I admire and respect Richard Branson, and my gut tells me that he does not realize that this is happening, because if he did, he would deactivate my account immediately like I requested in the many emails I have sent you.

As for the CEO of Virgin Mobile USA.

You get customers by providing a service.

A damned good service, which you did until I decided to switch carriers since sprint doesn’t really cover the boonies where I am at.

But, all you are doing lately is pissing me off.

At this point I might one day do business with Virgin Mobile because I like what Richard Branson is doing in  our world.

But if you keep this crap up, that ain’t going to happen either.

Hello,

Thanks for contacting Virgin Mobile Customer Care.

Sorry to know you are thinking of deactivating your account.

Unfortunately, we cannot process this request via e-mail. In order to process your account deactivation, please give us a call at the number below and any of our advisors will be able to help you out.

If you need additional assistance, feel free to let us know how we can assist further or contact us at 1-888-322-1122 (or *86 from a Virgin Mobile handset). You can reach us Monday through Friday from 6:00 AM ?

10:00 PM CST, Saturday and Sunday from 6:00 AM – 9:00 PM CST. As a kind reminder, always make sure to include your Virgin Mobile phone number and PIN on all replies.

Thanks,

Karol A.

Virgin Mobile At Your Service

www.virginmobileusa.com

Original Message Follows:

————————

From: Virgil Bierschwale &lt;vbiersch@gmail.com&gt;<br>

To: ourteam@virginmobileusa.com<br>

Subject: Important Service Information About Your Virgin Mobile

Account<br>

Date: September 14, 2014 5:31:19 PM CDT<br>

Folks, I’ve written numerous times to cancel this, and you’ve responded

that I have to call to cancel.

I DON”T HAVE to do any such thing, and I’m not going to call a number

and be put on hold, etc..

For the last time, cancel this.

(830) 377-5729

I guarantee your founder Richard Branson would be TICKED off if he knew

you were playing these games simply because he believes in doing the

right thing.

From: Virgin Mobile [mailto:virginmobile@mail-virginmobileusa.com]

Sent: Sunday, September 14, 2014 1:03 PM

To: vbiersch@gmail.com

Subject: Important Service Information About Your Virgin Mobile Account

Make a payment today!

Click here if you are unable to see the images in this email.

Hi,

Your monthly plan has expired and your service is unavailable. If you

choose to pay for another month of service, it’s easy to manage your

account online at My Account.

If you are having issues with your service, please call Customer Care at

1-888-322-1122, and a Live Advisor will be available to help resolve

your service issues.

For more information, log in to My Account.

Thanks

Virgin Mobile

This message is in reference to your phone number ending in 5729.

Your privacy is important to us. Please see our Privacy Policy for more

information.

Please do not reply to this message. If you have questions or comments,

send an email to ourteam@virginmobileusa.com.

Or contact us at: Virgin Mobile USA, L.P., 10 Independence Blvd.,

Warren, NJ 07059

No virus found in this message.

Checked by AVG – www.avg.com

Version: 2014.0.4765 / Virus Database: 4015/8210 – Release Date:

09/14/14

—–

No virus found in this message.

Checked by AVG – www.avg.com

Version: 2014.0.4765 / Virus Database: 4015/8219 – Release Date: 09/15/14

 

 

Our children will need farms and factories. We’re handing them smoke and mirrors — and a wink that these are the correct tools.

I thought you’d enjoy this not-horrible article from the Chinese Communist Press — keeping in mind, of course, that it comes from the same people who financed our refinancing bubble in anticipation of October 2008.  They’re brilliant and determined biological competitors who want us out of the way and then dead.

(Someday, you’ll thank me.)

There’s another issue here, in that the dollar-centric U.S. economy is essentially a bubble — fictitious, an illusion by which we defy gravity just long enough to get in, cash out, and leave the kids with our comeuppance.

Thirty-nine years of goods deficits — $12 trillion dollars, so far — means that our country is unsupported.  Our children will need farms and factories.  We’re handing them smoke and mirrors — and a wink that these are the correct tools.

“A nation’s standard of living [still] must be supported by a standard of productivity.”

You’re welcome.

“Why we are forever blowing bubbles”

[China Daily link -- September 15, 2014]

  • Even after many conversations with Nobel laureates, I have no clear answer.
  • New financial products that promised to help everyone realize the dream of home ownership proved to be too good to be true.  Because such innovations take a longer time to be shown for what they really are, bubbles may last longer and cause even greater damage.
  • A key feature is a lack of fundamental support. . . .
  • Another astonishing fact is that the government’s hands have been behind almost all bubbles.  The government allowed excessive liquidity, providing a foundation for bubble development.
  • Granted, capital markets have become far more powerful.  However, the financial industry can only be as powerful as the degree to which their clients choose to ignore risks and accept the fantastic pitches of those who sell financial products.

I can safely paste the rest of the article below — if you promise not to believe every word of it.

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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1150] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

 

 

The slowing of Chinese economic growth and cooling of the real estate industry have heated up the debate about whether housing and the economy as a whole have formed bubbles.

This is a tough question. Even after many conversations with Nobel laureates, I have no clear answer.

What exactly are economic bubbles anyway? Charles Kindleberg, a renowned Harvard economist who has studied them, says they are “unsound economic undertakings, often accompanied by highly speculative investment and price increases”.

The price increases themselves cause investors to think prices will keep rising without end. A key feature is a lack of fundamental support and a self-fulfilling prophecy. Traditional valuation methods are discarded during stock bubbles such as the Internet bubble of the late 1990s. Similarly, fundamental property investment criteria were ignored during housing bubbles in Japan, Hong Kong and the United States.

Ignoring basic criteria leads people to believe that “this time is different”. The market sometimes comes up with “ingenious innovations” such as “price to sales ratio” to support ridiculously high asset prices. Ideas that later seem preposterous may appear reasonable.

The South Sea bubble was embraced in Britain in the early 1700s. The South Sea Company was a British firm that won a monopoly in trade with Spain’s American colonies. An influential legislator declared that the rise in South Sea Company stock prices would benefit shareholders, the government and the common people connected to the company. So even if share prices were unreasonable, they were accepted as sustainable and beneficial. When the bubble burst, many British families lost their life savings.

Too much attention to short term prices, and obliviousness to the fundamentals, are key characteristics. During the 17th century tulip bubble in the Netherlands, a single prized bulb sold for as much as 20 townhouses in central Amsterdam. During Japan’s real estate bubble in the late 1980s, the land under Japan’s Royal Palace in central Tokyo (about 2 square kilometers) was estimated by some as more valuable than the total land value of California. What is intriguing is that investors were not turned off, but, if anything, attracted. This is a perverse aspect of bubbles: They are self-fulfilling prophecies. It is the belief that prices will keep rising that produces the bubble.

While bubbles are not always easy to define, economists have reached some consensus on their cause.

First, there is technological and financial innovation.

They are associated with a new product, a new technology, a new market, or a new region. Because of the emergence of new things, people feel they cannot rely on existing benchmarks to evaluate novel opportunities, providing ample room for speculators to spin their stories.

Because of the “mysteries” surrounding new things, investors are motivated to make speculative bets. Early successes stimulate the market to become foolhardy. Investors are driven by wishful thinking that the new things will change their lives forever. Innovations in business models and financial products can sometimes be even more convincing. New financial products that promised to help everyone realize the dream of home ownership proved to be too good to be true. Because such innovations take a longer time to be shown for what they really are, bubbles may last even longer and cause even greater damage.

Second, there is excessive liquidity.

Economic historians point out that there is always unprecedented excessive liquidity behind every major economic bubble. The Netherlands, the United Kingdom, the US and Japan, each the world’s strongest economies in their time, have all experienced bubbles and busts. That is partly because with fast expansion, policymakers engage in accommodative, if not lax, monetary policy. Also, with fast growth, international capital is pulled in, exacerbating the excessive liquidity.

So, too much money chases limited investment opportunities, which drives down the investment return of safe assets (such as the US Treasury rate during the 2007-09 US housing bubble), motivating investors to chase risky investments that promise higher returns. Many investors gradually lose their sense of risk aversion and greed takes over.

Short-term price increases further solidify investors’ beliefs. They also give policymakers a false sense of confidence for further policy easing, which is easier than popping the bubble. That further strengthens the market’s belief that government would not let the market crash, inducing even greater speculation.

Nobel laureate economist Vernon Smith showed that the more liquidity available given the same number of securities, the bigger the bubble and the longer it would last. Such experimental findings are strongly supported by historical anecdotes.

The third ingredient is inexperienced investors.

Smith also shows that the more experience investors have, the less likely a bubble. If subjects in an experiment have never participated in the simulated market, a bubble is likely. However, if they have, then the scale and length of the bubble would be greatly reduced. In cases where all participants have participated in the experiment three times, there was no bubble at all.

Experience helps investors better perceive risks. Some US researchers found that those who lived through the Great Depression were less likely to participate in market mania such as the Internet or housing bubbles.

Why does that matter? If some investors foresee that the bubble might burst soon, they are likely to sell early. That may prompt others to worry about the sustainability of the bubble, inducing greater and earlier selling. So bubbles would burst earlier. Unfortunately, humans have short memories. Only a few years after the 2007-08 global financial crisis, people have already started to forget and are talking about a new round of stimulus and easing.

The fourth element is government support. Another astonishing fact is that the government’s hands have been behind almost all bubbles. The government allowed excessive liquidity, providing a foundation for bubble development. Governments explicitly or implicitly supported or even encouraged bubbling asset prices. Government encouraged the taking of irresponsibly large risks by providing implicit guarantees.

In the middle of the tulip bubble, the Dutch government announced that for a small fee, tulip contracts could be invalidated. With such insurance-like policies, it provided peace of mind to speculative investors. The essence of such policies is very similar to the credit default swap contracts that directly contributed to the US housing bubble and subsequent market crash.

Finally, there is the role of finance.

Finance undoubtedly is a scapegoat after almost every financial crisis. Society blames the financial sector for creating excessive risks then abandoning basic moral standards in coercing the rest of society to bail it out after the bubble bursts.

Granted, capital markets have become far more powerful. However, the financial industry can be only as powerful as the degree to which their clients choose to ignore risks and accept the fantastic pitches of those who sell financial products.

We’re such great businesspeople,1975 was the last year U.S. global trade was in the black.

We’re such great businesspeople,1975 was the last year U.S. global trade was in the black.

Let your imagination soar.

“Historical Series”

www.census.gov/foreign-trade/statistics/historical

Deficit, U.S. Trade in Goods, Census Basis

  • $11,968,064,000,000  (January 1976 – July 2014)

Deficit, U.S. Trade in Goods, BOP Basis

  • $12,363,751,000,000  (January 1976 – July 2014)

Deficit, U.S. Trade in Goods and Services, BOP Basis

  • $9,575,405,000,000  (January 1976 – December 2013)

Deficit, U.S. Trade in Goods and Services, BOP Basis (2014 Seasonally Adjusted)

  • $295.3 billion  (January 2014 – July 2014)

“Costs of Major U.S. Wars”

www.fas.org/sgp/crs/natsec/RS22926.pdf

  • World War II: $296.0 billion

“CPI Inflation Calculator”

www.bls.gov/data/inflation_calculator.htm

  • $1.00 in 1941 has the same buying power as $16.21 in 2014
  • $1.00 in 1945 has the same buying power as $13.24 in 2014

“Senior Party official urges socialist values in artworks”

[Xinhua link -- September 14, 2014]

  • A senior Communist Party of China (CPC) official Saturday called on artists to uphold socialist values and promote the Chinese Dream.  Liu Qibao, head of the Publicity Department of the CPC Central Committee, made the remarks at a ceremony awarding outstanding publications, films, dramas and TV plays.  Chinese artists should always serve the people and their artworks should focus on ordinary people, said Liu, also a member of the Political Bureau of the CPC Central Committee.  They should uphold socialist values, promote the Chinese dream, carry on Chinese cultural traditions and send constructive and positive messages to their audience, he said.  He urged artists to uphold the good and criticize the bad, sharpen their creativity and resist vulgarity.

Let your imagination soar.
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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1149] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender

Treason being a capital offense, I would hang them, every one of them — after a fair trial, of course, and before a jury of their peers.

“Alas! regardless of their doom, The little victims play;” —

Last week’s official trade report reluctantly admitted that our goods deficit for July was $71,250,000,000 — or roughly $2.3 billion per day.

Adjusted for inflation, this isn’t much less than World War II — our most expensive war, ever — cost our then-beloved USA.

Our citizenry’s July deficit was in wealth-producing goods — not in wealth-transferring, wealth-prevaricating services.  This means we lost jobs, real income, factories, productivity, future growth, tax revenues, national independence, international influence, personal freedom, public health, and — while this apparently is considered too impolite to even notice — human lives.

How could $2.3 billion dollars per day — the cost of a full-scale “real” war — translate otherwise?

Some American experts say that our trade deficit, now upwards of $10 trillion since we last recorded a surplus, is a good thing — that this, for example, is how foreigners get the money to invest in American industries and infrastructure.

Treason being a capital offense, I would hang them, every one of them — after a fair trial, of course, and before a jury of their peers.

Most Americans cannot truly say that America would be a better place if every other American were just like them.

Because, then, every other American would be part of the problem, too, and soon there would be no one left to blame.

— “No sense have they of ills to come, Nor care beyond to-day:” — Tom Gray

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E-mail: DollarToTheGiant@Gmail.com for Fear-Fallen Children: “Dollar to the Giant” Chronicles & Comments June 2008 [#1] to Date [#1148] notably resisting America’s Shift from Wealth Creation to Wealth Transfer and Surrender